Waqf Structures in South Africa: Governance, Trustees and Estate Planning

Direct answer

A South African Waqf needs two layers: a clear Islamic endowment purpose and a legally effective local vehicle. A trust or non-profit company may be suitable, but the documents must define the endowed asset, beneficiaries, preservation and spending rules, trustee powers, Shariah oversight, succession and reporting. Tax exemption and section 18A donation receipts are not automatic; they require separate SARS approval and ongoing compliance.

Key takeaways

• “Waqf” describes the enduring charitable intention; South African law still needs a recognised legal structure.

• Choose a trust, non-profit company or established Waqf institution according to purpose and administration—not familiarity alone.

• Separate capital-preservation rules from the policy for distributing income or benefits.

• Trustees or directors need competence, independence, records and a succession process.

• PBO approval and section 18A approval are distinct and should never be implied before SARS grants them.

• Coordinate lifetime donations and testamentary gifts with the donor’s estate, liquidity and Islamic inheritance plan.

What is a Waqf?

A Waqf is an endowment dedicated to a permissible and enduring purpose. Traditionally, the underlying asset is preserved while its use or income benefits named people or a charitable cause. Examples can include property producing rent for bursaries, an investment portfolio supporting food relief, a building used for education, or a cash pool invested under an approved mandate.

The spiritual intention does not solve the legal and operational questions. Who owns or controls the asset? Can it be sold if a building becomes unusable? Which expenses come before distribution? Who verifies the beneficiaries? What happens when the original purpose is no longer practical? A robust structure answers these questions before money is raised.

Start with the purpose, not the entity

Write a purpose statement before selecting a trust or company. It should address:

• the charitable or family-benefit objective;

• the class of beneficiaries and any geographic focus;

• whether the Waqf is perpetual or created for a defined period under the accepted scholarly view;

• what part of the property must be preserved;

• what income or use may be distributed;

• whether administration costs may be paid from income;

• the Shariah standard and oversight process; and

• an alternative purpose if the original purpose becomes impossible or harmful.

Overly narrow wording can trap resources in an obsolete programme. Overly broad wording can leave trustees without a meaningful mandate. Draft a clear primary purpose plus a controlled alternative that remains close to the founder’s intention.

Which South African legal vehicle can hold a Waqf?

There is no single universal answer. Common routes include a trust, a non-profit company, or a contribution to an established institution that already administers Waqf assets.

Trust

A trust can separate the endowed property from the donor and place it under trustees for defined beneficiaries or purposes. The trust deed must align powers, prohibitions, appointment rules and distribution mechanics with the Waqf intention. Trustees must be authorised and must comply with South African trust law.

The Trust Property Control Act requires trust property to be identified and kept separate from trustees’ personal estates. Current provisions also require trustees to record, lodge and update prescribed beneficial-ownership information. The Master of the High Court publishes trust guidance and beneficial-ownership resources.

A trust should not be used as a label while the donor continues to treat assets as personal property. Independent decision-making, accounts and resolutions are essential.

Non-profit company

An NPC can suit an operating institution with staff, contracts, programmes and a board. Its memorandum of incorporation must support the non-profit purpose and governance model. Registration with CIPC does not by itself grant tax exemption or permission to issue deductible donation receipts.

An NPC may be less natural for a single endowed family property and more useful for a scalable operating charity, but facts differ. Compare director succession, membership, reporting, asset locks and administrative cost with legal advisers.

Existing Waqf institution

Contributing to an established institution can reduce setup and succession burden. Due diligence is still necessary. Review its founding documents, audited information, investment policy, Shariah governance, fees, distribution history and restrictions on donor-directed funds. Clarify whether your contribution creates a separate named fund, joins a pooled endowment or becomes an immediately spendable donation.

Design the asset-preservation rule

“Never sell the asset” can undermine the purpose when a property becomes unsafe, uneconomic or expropriation risk changes. At the other extreme, unrestricted disposal can erode the endowment.

The founding document should state:

• which property constitutes protected Waqf capital;

• whether replacement or substitution is allowed;

• who approves a sale or major encumbrance;

• how proceeds must be reinvested;

• how inflation and maintenance are considered;

• whether borrowing is prohibited or tightly limited; and

• what evidence supports an exceptional decision.

For an investment Waqf, adopt a written mandate covering liquidity, diversification, risk, prohibited sectors, financial screening, purification, delegation and reporting. Review the Shariah-compliant investing hub for the underlying investment principles.

Appoint trustees or directors for the work required

Good intentions are not a governance skill. The governing body collectively needs financial literacy, legal awareness, programme knowledge, beneficiary sensitivity and the ability to challenge conflicts. Include continuity beyond the founder’s close circle.

Set rules for:

• appointment, term, resignation and removal;

• independence and family representation;

• conflicts of interest and related-party transactions;

• meeting quorum and voting;

• emergency decisions;

• remuneration or reimbursement;

• delegation to investment managers and administrators;

• Shariah review; and

• succession when the founder is unavailable.

No trustee should approve a transaction in which they have an undisclosed interest. Related-party services should be demonstrably necessary, appropriately priced and documented. Minutes should record information considered, conflicts, decisions and implementation responsibility.

Separate five governance functions

A durable Waqf distinguishes:

1. Custody: who legally holds or controls assets;

2. Investment: who manages capital under the mandate;

3. Distribution: who selects beneficiaries and approves grants;

4. Shariah oversight: who reviews purpose, investments and use; and

5. Assurance: who prepares accounts, verifies controls and reports to stakeholders.

One small board may perform several functions, but the responsibilities should still be named. Avoid letting a single person collect donations, approve payments, reconcile the bank and report the result.

Understand tax-exempt and donation-receipt status

Non-profit status, income-tax exemption and section 18A approval are not the same thing. SARS explains that an organisation applies for tax-exempt status and that qualifying entities may separately obtain section 18A approval for specified public-benefit activities. Only an approved organisation may issue a valid section 18A receipt, and only from the effective approval date.

Review SARS’s current income-tax exemption process and section 18A guidance. Approval brings conditions, records and reporting. Do not tell donors that a gift is deductible until the organisation and use actually qualify.

Tax treatment for the donor, Waqf and beneficiaries can depend on asset type, residency, timing and legal form. Obtain advice before transferring appreciated property, company shares, foreign assets or a policy benefit.

Coordinate Waqf with estate planning

A person may establish a Waqf during life, leave a testamentary gift, or combine both. A lifetime structure allows governance to be tested and successors trained. It also transfers control now, so affordability and personal security must be reviewed.

A testamentary gift must be coordinated with the will, legal estate, debts, administration costs, tax, matrimonial-property consequences and Islamic inheritance rules. The portion available for a discretionary charitable bequest may be limited under the Shariah interpretation being followed, especially without heirs’ post-death consent. Do not assume that naming a charity informally will be effective.

Map ownership and liquidity, draft with a South African attorney, and obtain a qualified Shariah review. The MuslimFin inheritance calculator can illustrate heir shares from supplied assumptions, but it cannot validate a Waqf bequest or determine the distributable legal estate.

Reporting that earns trust

An annual Waqf report should explain:

• opening and closing endowed capital;

• investment performance and fees;

• additions, substitutions and disposals;

• programme distributions and beneficiary criteria;

• administration and fundraising costs;

• related-party transactions;

• Shariah review and any purification;

• material risks and breaches; and

• trustee or director changes.

Report outcomes as well as money spent. “R500,000 distributed” does not reveal whether the programme reached eligible beneficiaries or created durable benefit. Protect beneficiary privacy while publishing enough information for accountability.

A founder’s implementation checklist

1. Define purpose, beneficiary class and alternative purpose.

2. List the proposed endowed assets and any debt or restrictions.

3. Decide whether to build a structure or use an existing institution.

4. Obtain South African legal, tax and Shariah advice.

5. Draft preservation, substitution, spending and investment rules.

6. Select capable governors and document conflicts.

7. Open dedicated accounts and establish dual approvals.

8. Apply for relevant registrations and tax approvals; do not pre-claim status.

9. Create accounting, beneficiary-selection and annual-report processes.

10. Coordinate the structure with wills, nominations and family governance.

Frequently asked questions

Must a South African Waqf be a trust?

No. A trust is one possible vehicle. An NPC or established Waqf institution may be more suitable depending on the assets, operating model, beneficiaries and governance needs.

Can a Waqf issue section 18A receipts?

Only if the legal entity and qualifying activities have received the necessary SARS approval. Waqf status or NPC registration alone is not enough.

May trustees sell Waqf property?

The answer depends on the founding terms, South African law, circumstances and Shariah view applied. Documents should address exceptional sale and mandatory reinvestment before a crisis arises.

Can family members serve as trustees?

They can where legally eligible, but the board needs competence, conflict controls and genuine decision-making. Independent trustees can strengthen continuity and accountability.

Is a Waqf the same as Zakah?

No. A Waqf is an endowment structure; Zakah is a separate obligatory form of worship with defined eligibility and calculation principles. A Waqf’s activities are not automatically eligible to receive Zakah.

Next step

MuslimFin can help a family frame the financial, governance and estate-planning questions before specialist legal, tax and Shariah drafting. Explore the Islamic estate-planning hub or contact MuslimFin.

Important: This guide is general education, not personal legal, tax, financial or Shariah advice. Waqf validity, trust powers, tax approval and testamentary limits depend on the facts and documents. Use appropriately qualified South African and Shariah professionals.